Pacific Trade Research Paper

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The Pacific Ocean once (and understandably) was perceived as a huge obstacle in the process of exchange—it accounts for one-third of the surface area of the Earth—but it has in fact fostered trade, first in spices, silver, and silks, since the sixteenth century.

The Pacific Ocean comprises over one-third of the surface area of the Earth, is larger than all earthly landmasses together, and equals all remaining oceans/seas combined. The Pacific is double the size of the Atlantic Ocean and contains more than twice the water. Given the Pacific Ocean’s magnitude, it is unsurprising that observers traditionally conceptualize it as a colossal barrier to interchange, and regard meaningful and lasting trans-Pacific activity as recent (perhaps post–World War II) and unprecedented. Yet such conventional views are false: crucial trans-Pacific and intra-Pacific interactions have been unfolding since the sixteenth century. Improved navigational technology turned oceans into freeways rather than barriers to interchange. For example, unusually high wages in Gold-Rush San Francisco prompted its affluent residents to have their laundry done in Guangzhou (Canton), China, for a brief time. Control of ports (or at least access to them) has been crucial to Pacific history for centuries.

Spices and the Arrival of Europeans

Islamic traders were already established in Guangzhou, in Gujurat, India, and in Sumatra by the ninth, tenth, and thirteenth centuries, respectively. Melaka, Mindanao, and the Moluccas (the Spice Islands) were Islamic sultanates when Portuguese and Spanish ships arrived in the sixteenth century. Moreover, three vast Islamic empires—the Ottomans (Turkey), the Safavids (Persia), and the Mughals (India)—served as connectors between Asian Pacific islands and European marketplaces. Venice was the key marketing power for Asian spices entering the Mediterranean basin prior to the sixteenth century.

The Portuguese sought Asian spices. In 1511 Albuquerque conquered Melaka—a strategic hub connecting trade networks of the South China Sea, the Indian Ocean, and the Spice Islands. From this base, the Portuguese subsequently established entrepots along the coasts of China (Macao in 1557) and Japan (Nagasaki in 1570). Vast networks of Indian Ocean and Asian Pacific exchange predate the appearance of European powers. While Portuguese ships transported perhaps half of the pepper and spices that Europeans consumed during the first half of the sixteenth century, Arabic, Indian, and Malay merchants continued to play an important role in the Indian Ocean trade, shipping spices through the Red Sea, the Persian Gulf, and other traditional routes into the Mediterranean basin.

Spain’s imperial presence in the Pacific followed Ferdinand Magellan’s crossing of the Pacific in 1521, in search of an alternative route to the Moluccas. Although only one small Magellan ship (of several) finally returned to Spain, its 500,000 pesos in spices generated a moderate profit overall. Thus, Spaniards knew for certain that huge profits awaited future silver shipments from Mexico to the Philippines. Over four decades of frustration followed, however, because powerful westward trade winds and currents thwarted attempts to sail from the Asian side of the Pacific back to the Americas. Miguel Lopez de Legazpi finally succeeded in 1565 by sailing a northerly route past Japan and then southward down the American coast back to Acapulco, a route subsequently followed by the Manila galleons for 250 years (and followed by ships today in search of fuel economy). Legazpi established Spain’s first permanent settlement in the Philippines on the island of Cebu, but abandoned Cebu in favor of Luzon’s great natural harbor in Manila Bay in 1571. Embracement of the Chinese junk trade via Manila Bay implied abandonment of the spice trade via Cebu, but the burgeoning silver-for-silk trade generated prodigious mercantile rewards.

Relations between China and the Philippines predate the sixteenth century. Filipino traders had reached Guangzhou by 982 CE. Chinese sources refer to a Philippine maritime raid of a coastal village in Fujian (southern China) in the twelfth century. Filipino ambassadors were received at the emperor Yung-lo’s court in 1406 bearing “tribute.” Commerce thrived as well among the archipelagoes and surrounding Southeast Asian countries (as well as Japan). Like the majority of the Philippines, “Maniland” was already religiously and culturally Islamic by the sixteenth century.

Batavia, on the island of Java, was established as the headquarters of the Dutch East India Company in 1619. From this strategic position in the Sunda Strait, the Dutch displaced the Portuguese and established dominance over the lucrative spice trade.

Silver and Cross-Pacific Linkages

Tectonic forces endowed mountains around the Pacific’s edge—its volcanic “Ring of Fire”—with vast holdings of metals. Earthquakes and volcanic activity are characteristics of these mountain ranges, as well as of the islands and archipelagoes of the Pacific. Much economic and social coherence around the Pacific region stems ultimately from geological history, and nothing influenced trade relations around the Pacific Ocean more—from the mid-sixteenth century to the mid-nineteenth century—than the production and shipment of metals.

Continuous trade between Asia and the Americas did not exist prior to the founding of the city of Manila in 1571. The sudden eruption of substantial direct exchanges between America and China depended upon two industries: Spanish-American silver and Chinese silks. Manila was the linchpin that connected China and Mexico. From Acapulco, Chinese goods were in turn transshipped to Peru and elsewhere in the Americas (and even on to Spain). The first Filipino and Chinese immigrants arrived in America aboard these galleons.

The Manila galleons carried an annual average of 2 million pesos (i.e., fifty tons of silver) during the seventeenth century (voyages that continued until the last galleon was captured in 1815 during Mexico’s War of Independence). Manila galleons carried as much silver over the Pacific as the combined shipments of the Portuguese Estado da India, the Dutch East India Company, and the English East India Company—major connectors between Asian and European markets.

Merchants of many ethnicities enjoyed high profits: Chinese silks exports rushed toward high silk prices in American markets, while American silver simultaneously rushed toward high silver prices in China. For instance, in 1630 the Portuguese shipped mainly Chinese silks worth 1,500,000 pesos (3,000,000 pesos worth in Mexico), contradicting the common claim that galleon trade declined during the seventeenth century.

Manila’s population was diverse: Spaniards of Intramuros (the walled center of Manila) were surrounded by segregated populations of Chinese and Japanese, with groups of free and enslaved blacks living in the city. Jesuits organized sodalities for blacks and the local government expelled five hundred free blacks for vagrancy in 1638. Some Manila galleon slaves were sold upon arrival at Acapulco. Africans were sailors on Portuguese ships navigating between China and Nagasaki; they defended Macao against a Dutch fleet and were active in Goa and other Portuguese settlements.

At the main square in Mexico City, authorities established a “Parian” (Chinese neighborhood) where all kinds of products arriving via the Philippines were sold. Trade between Mexico and Peru reflected the vital Manila trade. When a 1634 prohibition blocked Mexican silks from Peruvian markets, Chinese finished silks rose to 90 percent or more of the value of goods traded between Mexico and Peru. Spanish officials traveling in Central America and Peru in the eighteenth century reported widespread sale of Chinese porcelain in Lima and open sale and usage of Chinese silks everywhere from Chile to Panama.

China and the Pacific

China occupied a central role in the Asian and Pacific economy. Large fleets of junks reached Africa and the Middle East during the early fifteenth century. Lack of subsequent European-style trade developments, however, has prompted scholars to blame Chinese state interference for China’s failure to modernize during the early modern era. Historical facts do not coincide with this conventional hypothesis. The Chinese economy “silverized” during the sixteenth century because its paper-money system collapsed, whereupon silver was adopted by merchants for monetary purposes. Subsequent changes in the taxation system reinforced the central role of silver in the Chinese economy. Importation of silver therefore formed the basis of an immense commercial expansion. Despite a lack of official Chinese sponsorship of foreign commerce along European lines, extremely successful Chinese commercial networks emerged throughout Asia during the early modern period nonetheless.

China was the primary demand-side force operating in the global silver market. Silver poured into China via all maritime and land-based trade routes simply because the white metal’s price in China was double that of the rest of the world by the late sixteenth century. On the supply side, tremendously rich concentrations of silver were discovered in Japan, Peru, and Mexico beginning in the 1540s, and technological innovation further reduced mining costs. It was this combination—high silver prices in end-market China and cheap production costs in Japan and the Americas—that led to the greatest global mining boom the world had ever seen. Acting as intermediaries between the Chinese marketplace and Japanese mines, the Portuguese engaged in highly profitable trade until a 1639 shogunal edict expelled them in favor of Dutch intermediaries (confined to Deshima, a minute islet within Nagasaki Bay). Profits from Japanese silver mines financed Japan’s unification under the Tokugawa shogunate by 1600; similarly, American silver-mine profits financed resource-poor Spain’s emergence as a premier European power. Both phenomena depended upon high silver prices in the Chinese marketplace. But a century of unprecedented silver imports eventually managed to glut even the giant Chinese marketplace; the price of silver fell and equalized throughout the world by 1640, ending a century-long “Japan and Peru Cycle of Silver” that began in the 1540s. Vanishing profits caused a worldwide trade crisis, and effects reverberated globally for centuries.

Aside from carrying vast volumes of silver and silks, the Manila galleons served as a vector through which American crops were introduced into Asia. New plants such as the sweet potato and peanut were particularly significant because they grew in colder, rocky, and hilly environments like those found in sparsely populated areas of China. Large regions to the north and west could now support relatively dense populations for the first time. Han China’s population more than doubled during the eighteenth century and China’s territorial size doubled as well, leading to drastic restructuring. Expansion of the Chinese economy implied dramatic increase in the domestic demand for silver one more time. As a consequence, the price of silver in China again rose above that of the rest of the world by 1700 (50 percent higher this time). Reminiscent of the 1540s–1640 silver boom, merchants worldwide once again bought silver where it was cheap and transported it to lucrative Chinese markets. American silver again flooded into China, causing China’s silver price to sink to the world silver price level by the 1750s. This time, abnormally high silver-trade profits vanished in fifty years (1700–1750) rather than a century (1540s–1640). The bulk of the silver entering China during this 1700–1750 cycle came from Mexican mines. Not only were the Mexican silver mines the richest in world history—prior to the Nevada discoveries in the 1860s—but the Mexican peso in particular dominated all silver-money rivals throughout the Pacific Islands, along the Asian coast, from Siberia to Bombay, and indeed throughout North America as well. In 1785 the U.S. Congress declared the Mexican peso (called the “dollar” in Anglo-Saxon countries) an ideal monetary unit for its new nation.

Early Integration of the Pacific

Notwithstanding the conquest of Guam (1662) and the Marianas in the last decades of the seventeenth century, the Manila galleons did not break the Pacific Islands’ isolation from the continental Rim. Further integration of the Pacific region occurred between the mid-eighteenth century (end of the Mexican silver cycle) and the mid-nineteenth century (initiation of the “gold period”), when intensified exploration combined with new commercial opportunities. Although Dampier’s voyage contributed Australia to the global map as early as 1669, voyages by Bougainville and Cook a century later added Tahiti, Samoa, eastern Australia, New Zealand, and Hawaii to the list of “new worlds” explored by Europeans. Only after Cook’s eighteenth-century explorations were many insular Pacific societies meaningfully linked to the world economy. In 1788 a British fleet established a penal colony in Australia.

Although the impact of American plants like maize, potatoes, peanuts, and cassava (the “Magellan Exchange”) on mainland Asian societies was immense, the 450 European ships that crossed the Pacific between 1521 and 1769 generated little ecological impact on many Pacific islands initially. Cook’s voyages dramatically accelerated impacts on the islands. The first consequence of the European contact was a demographic catastrophe that involved a 90 to 95 percent population decline on many islands; population numbers stabilized around 1880–1920, and only grew subsequently. Diseases, enslavement, and migration were factors in the decline. Labor migration contributed to the spread of germs around the Pacific. Introduction of new crops and alien species—such as grazing animals, mosquitoes, and rodents—altered island ecologies. Sheep were introduced in Australia and New Zealand for the textile industry. Thanks to the use of quinine (from trees in the Andes) for combating malaria, native or Asian wage laborers were used to develop island plantations that emerged around the Pacific.

Many perceive European voyages and settlements as the main unifying forces around the Pacific, but American and European merchants actually served as middlemen between Chinese markets and Pacific Island ecosystems, which suffered resource depletion on a grand scale. With the exception of whaling, extractive activities were directed to the Chinese market. Sandalwood, sealskins, beche-de-mer (sea cucumber), tortoiseshell, timber, and many other products were exchanged directly and indirectly (via Western manufacturers) for Chinese silks and tea. Sometimes ecological consequences were also indirect, such as when the forests of Fiji were destroyed to provide fuel for drying sea cucumbers for export. Nineteenth-century Hawaiian kings ordered forests torched in order to detect the distinct aroma of burning sandalwood, a product exported mainly to China. All kinds of special products from the Pacific entered the Chinese marketplace directly; or Pacific products could be sold elsewhere in exchange for silver (since China was still the world’s largest market for the white metal). Societies isolated for millennia were suddenly linked to world markets with millions of people demanding products from their fragile ecosystems. Scarcity of previously gathered Pacific products after 1850 reduced focus on the Chinese marketplace. American colonists had imported Chinese products since 1700, and merchants from America’s East Coast arrived in Guangzhou after the American Revolution. American, British, and Russian seal hunters scoured the America’s Pacific coast between 1780 and 1850 in response to demand for furs destined mainly for Chinese, Russian, and European markets. Indeed, the northward spread of Spanish missions up California’s coast was a response to southward expansions by non-Spanish fur traders, especially Russians. And by 1800 American whalers and seal hunters were active along the coasts of South America and Antarctica.

The Gold Period

The Pacific’s “gold period” began in 1848 with the California gold rush and corresponded with expansion of the U.S., British, Dutch, and French influence on the Asian mainland. Railroad expansion connected interior regions with continental ports, while steamship technologies revolutionized intercontinental commerce. European steamships and powerful new guns were decisive in overthrowing the status quo in Asia. Commodore Perry imposed a commercial treaty on Japan’s isolationist Tokugawa regime in 1854 and within a few decades Japan industrialized. Victories over China in 1894–1895, then Russia in 1904–1905 demonstrated Japan’s emergence as an economic power, although Southeast Asia was virtually under the colonial rule of the British, Dutch, and French by 1900.

The Battle of Plassey, India, in 1757 altered Asian trade patterns in that the British gained control of Bengal’s opium production. Although silver continued as China’s principal import, British opium exports to China dominated in terms of profitability. Chinese opium imports rose more than twentyfold between 1729 and 1800. The Chinese emperor Qianlong restricted European merchants to the port of Guangzhou in 1759, where foreigners were allowed to deal only with Chinese firms (hongs) under strict governmental regulation. Chinese exports of silks, porcelain, and tea required import-payment via silver or opium (since there was Chinese demand for little else). Silks were produced elsewhere by this time, and Germany (1709) and Britain (1742) finally mastered production of porcelain. Tea was produced in quantity exclusively in China, however, until the Dutch (Java) and British (Ceylon and India) developed successful tea plantations at the end of the nineteenth century.

Trade in opium was illegal in China. When Chinese authorities tried to stop it, wars with Britain (1839–1842), Britain and France (1856–1858), France (1884–1885), and Japan (1894–1895) resulted. The Treaty of Nanjing (1842) began a series of unequal treaties that regulated Chinese foreign relations until 1943. China’s tributary system was dismantled, Hong Kong was placed under British sovereignty, Chinese ports were opened to commerce, and the opium trade became legal. Britain’s trade surpluses with India contributed to Britain’s economic strength and to the growth of the Atlantic economy. The British monetary system was based on gold for the major part of the nineteenth century and during some decades of the twentieth. The gold mines of Australia discovered in 1851, the ones in New Zealand in 1861, and exports from India to China provided substantial support for the pivotal role of the City of London in the world financial system.

British activities along coastal China during the first half of the nineteenth century correspond with American expansion in the Pacific beginning with the California gold rush (1848). California became a state in 1850, Oregon in 1859, and Alaska was purchased from Russia in 1867. In 1898, Hawaii was annexed and the Philippines were acquired following defeat of Spain. European powers soon divided China into spheres of influence. In response, United States formulated an Open Door Policy in 1900, which required open trade, territorial integrity, and independence for China. Competition for the Chinese marketplace remained central under such proclamations.

Implications

Often thought of as a “Spanish Lake” between the mid-sixteenth and mid-eighteenth centuries, the world’s greatest ocean was exploited with remarkable success by Iberians (as well as Dutch, Chinese, and other merchants) who controlled key ports providing access to major market areas. From the mid-eighteenth through much of the nineteenth century, numerous nations vied for control of sections of the Pacific. Gold rushes stimulated commercial connections from the mid-nineteenth century. Industrialization narrowed the range of contenders for Pacific supremacy. The Pacific became an “American Lake” after World War II, and American commerce and power remains a dominant force in the Pacific today. It is useful to view the rise of Asian economic powers during the second half of the twentieth century as a reemergence of a centuries-old pattern of response to forces largely emanating from the mainland Asia.

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